Why Southern California is called the 'wage theft capital of the country'

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Beating drums and waving hand-lettered signs, 40 garment workers marched in front of a Los Angeles Ross Dress For Less outlet chanting “Ross Stores, you can’t hide! We can see your greedy side!”

Among the protestors on a sunny Saturday before Thanksgiving, Maribelia Quiroz, 46, mother of three, said she stitches blouses for Ross at a downtown contractor, earning $300 a week for up to 60 hours of work, with no overtime.

A spokeswoman for Ross said the retailer complies with labor laws. Butfederal officials say Quiroz’ wages are typical of Southern California’s underground garment industry, a vast web of factories which employs immigrants from Latin America and Asia, many of them undocumented, in Los Angeles and Orange counties and the Inland Empire.

Usually paid by the piece—8 cents to attach a sleeve, for instance, or 14 cents to affix a label—workers are crowded onto shop floors, often dusty and unventilated, stitching the “Made in USA” fast fashion clothes that consumers want to buy cheap.

“Enough is enough,” said Ruben Rosalez, a U.S. labor department regional administrator, in unveiling a supply chain analysis before a phalanx of television cameras at a Los Angeles news conference.

“I’m sad to say that in 2016, we have sweatshops in America. In the past three decades, the abuses have gotten worse.”

In recent years, American apparel makers moved much of their work to low-wage countries such as Mexico, China, Vietnam and Bangladesh.

In Southern California, the nation’s largest garment manufacturing center, jobs dropped from more than 100,000 in the mid-1990s to 46,200 last year, according to the U.S. Bureau of Labor Statistics.

Still, apparel remains the region’s second biggest manufacturing employer after the transportation equipment sector, which includes aerospace.

That’s because consumers often want the latest styles, ripped off runways and rushed to retailers in weeks, rather than in the months involved in foreign supply chains.

The hunger for bargains comes at a social cost. Retailers set prices they believe consumers want, but their U.S. suppliers can’t begin to manufacture garments at those prices if they pay legal wages, according to government and industry experts.

Officials say federal and state laws only allow them to penalize direct employers. That means local subcontractors—small businesses mostly owned by Korean immigrants in Los Angeles and by Vietnamese refugees in Orange County-- are the ones hit with back wages and damages.

The manufacturers—middlemen who engage the contractors--are mostly insulated. The retailers who employ the manufacturers escape liability.

But this year, in an effort to hold department stores and major brands accountable, U.S. labor department launched a new strategy—analyzing supply chain pricing to trace wage theft back to the stores that sell the clothes.

“We’ve been beating our heads against the wall,” Rosalez said. “Retailers have the power to have a quality monitoring program. We need them to come to the table.”

In April, officials undertook a complex analysis at 77 randomly-selected contractors: 65 in Los Angeles County, 10 in Orange County and one each in San Bernardino and San Diego counties.

They interviewed workers to learn what they were paid for piecework and then timed each task—whether stitching a zipper or snipping threads off a finished garment.

Were the factories keeping accurate records of employee hours? Did workers’ piecework earnings amount to the minimum wage plus overtime?

Not even close.

Eighty-five percent of the shops were found to be cheating, paying as little as $4 an hour, and an average of $7 an hour—far below California’s $10 minimum wage.

The contractors were forced to cough up $1.3 million in back wages and damages to 865 workers, covering a period of three months work.

Many were small operators with little power to negotiate higher prices for their garments. The San Bernardino shop had only four employees. Orange County’s largest, Dld Express in Santa Ana, had seven, records show.

Eleven contractors were making garments for Ross, a Dublin, California-based chain with $11.9 billion in revenue last year.

Clothing for T.J. Maxx, a subsidiary of Massachusetts-based TJX Companies, the nation’s largest discount powerhouse with $31 billion in annual revenue, was found at seven of the offending factories.

Items destined for Forever 21, a Los Angeles-based chain with $4.4 billion in revenue last year, famous for religious-themed T-shirts and for featuring a Bible verse on its shopping bags, were produced at another seven of the contractors that underpaid workers.

The results hardly surprised investigators. Garments from the same retailers have repeatedly turned up in wage theft cases over the past 15 years.

In the past two years, federal officials investigated 668 garment factories in Southern California, finding an 85 percent violation rate and assessing $8.1 million in unpaid wages owed to 5,158 workers.

Many factories falsify time cards. Employee checks list fewer hours than they actually work. Many are paid in cash or, Rosalez said, with vouchers they can only redeem for a fee at a check cashing outlet “in cahoots with the contractor.”

Long hours on single-needle machines lead to repetitive stress injuries, but workers are often denied legally-required breaks, investigators find.

Spokeswomen for Ross and T.J. Maxx declined to discuss the investigations. Emailed statements asserted they comply with the law, and they make sure their vendors do too.

Forever 21 did not return calls.

The pre-Thanksgiving protest against Ross was the fourth since the Los Angeles-based Garment Worker Center, a small non-profit, launched a campaign against the retailer in May.

“Consumers should think twice before supporting these brands for their holiday shopping,” said organizer Mariela Martinez, adding that the center targeted Ross because so many local workers sew for the retailer.

In February, a Ross manufacturer, Vernon-based YN Apparel, was ordered to pay $212,000 in back wages for 270 employees who earned as little as $5 an hour with no overtime.

Federal investigators found Ross paid YN about half the amount sufficient for garment workers to earn the minimum wage, and YN paid its 13 contractors in Los Angeles and Garden Grove a third of the amount needed.

“Southern California is the wage theft capital of the country,” said Jessie Kornberg, President and CEO of Bet Tzedek, a Los Angeles public interest law firm.

Over 15 years, the firm has filed claims with the California Labor Commissioner on behalf of 5400 workers, many of them in the garment industry, recovering $36 million in back wages—efforts separate from federal enforcement.

“Retailers sell clothing priced at rates they know must result in contractors breaking the law,” she said, adding that the firm is working on a legal case to reclassify retailers as “joint employers” of garment workers.

At the Ross protest, Maria Ramirez, 47, marched with a hand-painted sign reading “Every mother is a working mother.” She said she had worked for Sam’s Fashion in Los Angeles, a large YN contractor, earning $260 for 55-hour weeks stitching clothes for Ross, T.J. Maxx, Marshalls and Charlotte Russe.

Within days of the federal inspection, the factory, owned by Korean immigrants, fired all the workers, closed, and reopened in another location under a different name--a common tactic to intimidate workers and dodge liability, according to labor officials.

Ramirez she often took piecework home at night, asking her husband, a valet parking attendant, to help. Even so, with four children, “You can’t survive,” she said.